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Ms. Nina Grall, Head of ECRB section: SEE regional energy markets reform process to be improved in 2012

27. February 2012. | 12:16 18:58

Source: Serbia-energy.com

SEE regional energy markets reform process to be improved in 2012, Energy Community expects accelerated progress and involvement of all contracting parties.

Serbia Energy Magazine interview with Ms. Nina Grall, Head of ECRB section, on SEE region Energy Market Reform Process Integration

Serbia-Energy: Energy Community members accepted certain time frame and action plan for reform steps implementation, are you satisfied with those measures and are there any delays and for what reason?

Ms.Grall: There is no single answer to this question. The picture of implementation is diverse, with some Contracting Parties’ energy legislation clearly being in better compliance with the acquis communautaire than others’. Also, differences between the Contracting Parties widen - a development that does not positively contribute to the target of a regional market. On the other hand, several Contracting Parties caught up in 2011. The reforms made in the Former Yugoslav Republic of Macedonia, Montenegro and Serbia are good examples in this relation; but also Albania and Moldova are discussing reforms for keeping pace. But legislation is only the first step. Application of the rules in practice in wording and spirit is the trigger for the success of liberalization. Market opening and integration have not yet been fully implemented in real terms. The reasons reach from more fundamental challenges such as lack of serious phasing out of regulated energy prices and single buyer models to more individual leaks, in particular related to balancing, day- ahead and secondary markets.

On balance the Secretariat, however, concluded in its 2011 review that the majority of Contracting Parties has reached a transposition level that will allow for the implementation of the third package. This said, we will have to continue joining forces for successfully transposing this important amendment of the Energy Community Treaty and keeping pace with the European developments.

Serbia-Energy: The start up of regional wholesale market pilot project DAM is also projected for 2012, how do you comment the current activities and can be see DAM running this year?

Ms.Grall: The so-called Regional Action Plan for Electricity Wholesale Market Opening in SEE - jointly developed by the Energy Community regulators and network operators and also endorsed by the Ministerial representatives - indeed foresees common measures to be taken on regional level in relation to day-ahead markets (DAM). The success of this will, however, strongly rely on the efforts taken on Contracting Party level for establishing appropriate DAM rules. So far, the picture is unfortunately far from being satisfying – only a very minority of the Contracting Parties have even established DAM principles, not talking about practical running yet. Non-compliance with the acquis communautaire in this area is one of the key barriers for a serious liberalization progress. Accelerated progress therefore is clearly a key priority on the Secretariat’s implementation agenda 2012.

Serbia-Energy: One of the regional market opening tools important for cross border energy exchange is CAO office which was planned to be opened in Montenegro in beginning of 2012, what is the latest status and what are plans for 2012?

Ms.Grall: The project, unfortunately, faced some delay in the past. The originally envisaged target of the SEE CAO starting operation in early 2012 cannot be met. This still existing lack of a regionally coordinated capacity allocation mechanism remains a key concern for the Secretariat, both in terms of market liquidity and compliance with the acquis communautaire.

Remarkable progress, however, has been made in the recent months by the involved network operators in close cooperation with International Financing Institutions (IFI). We are in particular also very grateful for the extensive financial involvement that the IFIs are considering for support of the project. There is now well-founded expectation that a TSO founded company responsible for preparing the operational kick-off of the SEE CAO can start activities by mid of 2012. The company’s tasks are supposed to be completed within one year; this is also the timing within which beginning of the SEE CAO’s operation should be realistic.

Serbia-Energy: The World Bank financed a study on wholesale market opening for SEE, updated report from 2011 conclusion are that many of the reform process are still not completed. What is the view of the Energy Community Secretariat on different initiatives for regional energy stock markets, how does the Energy Community Secretariat’s work support this initiative?

Ms.Grall: The wholesale market opening study identified a number of core legislative and regulatory principles that need to be implemented on national level as a precondition for successful wholesale electricity market opening on regional level. The elements very much correlate with the areas of non-compliance with the acquis communautaire that the Secretariat claimed most crucial in the past years.

The study proposes solutions for wholesale electricity market opening on regional level. The Energy Community regulators and network operators aligned these recommendations with the European electricity market targets. In particular regulators and network operators are now in charge of implementing the regional milestones in line with the timetable they and the European imperatives imposed on them. The development of power exchanges is one element of this process for which concrete realization steps are foreseen still in 2012.

However, the success of the regional efforts will strongly rely on filling the existing legislative and regulatory gaps on Contracting Party level. Guiding and assisting in this process is in the heart of the Secretariat’s activities.

Serbia-Energy: Can you evaluate the level of involvement and specific result driven approach and its effects of Serbian stakeholders in mentioned reform steps and process ( namely some relevant institutions, involved parties and/or Serbian stakeholders involved in mentioned process?

Ms.Grall: The involvement of the various players in the Energy Community process is, in principle, fairly good. The level of involvement, however, differs between the Contracting Parties and, in particular, institutions and stakeholders. For some Contracting Parties we would like to see more active involvement of national regulatory authorities, competition and state aid authorities or courts to contribute better to the reform process. One has to see that successful realization of the Energy Community process strongly relies on efficient transposition of the regional rules into the national frameworks. Without active engagement of the individual stakeholders on Contracting Party level, this attempt becomes at least more difficult.

Serbia, in general, shows high standard involvement in the Energy Community process and regional institutions. The recent Serbian proposal for development of a Regional Energy Strategy as a key initiative is a good example for ownership of the process. This is certainly very much appreciated as indispensible pre-condition for making the Energy Community process also working in real terms.


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